AKRON — Goodyear has targeted its off-the-road (OTR) tire business for potential sale as part of a plan to drive shareholder value.
In the "Goodyear Forward" plan, announced Nov. 15, the company and its board decided the chemical business, Dunlop brand and OTR tire business would undergo review for potential sale.
CEO, President and Chairman Richard Kramer presented the plan an hour after publicly announcing that he would retire in 2024.
"We are working with financial advisors to review options for these assets that we expect will deliver gross proceeds in excess of $2 billion," Kramer said.
"We are taking a two-pronged approach to margin enhancement, pursuing both top-line and cost-reduction actions together adding $1.3 billion to run-rate earnings benefit over the next two years. These initiatives will double our segment operating income as a percent of sales by the end of 2025."
The OTR business provides specialized tires for the mining and construction industries with annual revenue of approximately $700 million.
Goodyear produces OTR products at its mixed-use Topeka, Kan., plant (that also makes light truck tires) and at its dedicated OTR plant in Tatsuno, Japan — and to a lesser extent at plants in Adapazari, Turkey, and Uitenhage, South Africa.
Last year, Goodyear announced a five-year $125 million investment in the 77-year-old Topeka plant, which employs 1,600. The company declined to comment further when asked by Tire Business how a potential sale would impact the Topeka plant.
In total, Goodyear operates 42 tire plants in 23 countries on five continents.
Goodyear mainly makes OTR tires for construction, surface mining, quarry mining, underground mining, and port and industrial handling. In its OTR tire product catalog, Goodyear lists 147 tire models — most coming in a wide range of sizes — for a variety of heavy equipment.
Goodyear did not disclose specifics but said the largest area of impact from the move would be in the Asia-Pacific business unit.
Over the last 20 years, Goodyear has divested its agriculture tire business to Titan International Inc.
Titan bought Goodyear's North American farm tire operation in 2005. In 2011, West Chicago, Ill.-based Titan then acquired the rights in the Latin America segment.
In 2015, Titan bought the rights to make and distribute Goodyear-brand farm tires in Europe, the Middle East, Africa, Russia and other Commonwealth of Independent States countries.
Last year, Titan added an offtake-supply deal for Goodyear-branded radial agricultural tires with a Turkish tire maker for sale throughout Europe.
Titan is ranked as the No. 21 largest tire maker in the world with 2022 tire sales of $1.736 billion. Titan has not responded to a request for comment.
Kramer said Goodyear's OTR business is significantly smaller than its largest competitors.
"The amount of capital it would take for us to achieve competitive scale is significant, and that's unlikely to be achievable in this foreseeable future," Kramer said. "As a result, we've decided to assess opportunity to potentially monetize this business as well."